Zuckerberg is an entrepreneur at heart, not an operator. Therein lies the problem.
Our view is that as the macro environment continues to slow and as the original Facebook and Instagram platforms underperform, Zuckerberg will pull investment forward on his metaverse initiative. The metaverse is what interests Zuckerberg and that’s where he will spend his time, energy and META’s capital. This is already the case and hardly news.
- Broken promises: Zuckerberg won’t be able to control himself and will borrow more heavily from Facebook’s Ad revenue than analysts anticipate.
- EPS hit: Analysts will underestimate this Operating Margin hit when they update 2023 and 2024 earnings coming off of the September quarter call.
- Timing: When Zuckerberg will begin to pull investment forward is unknown, although we believe Zuckerberg will likely break sometime in 2023 as he tires of living with Facebook’s weak operating performance.
- META the venture investment: META truly is a publicly-traded venture investment, one where the core thesis is unproven and the time-to-monetization is unknown. I will however give Zuckerberg credit for working on his Muay Thai skills (title image).
- META & The UFC?
- Is META Cheap?
- The Metaverse Is The Least of META’s Problems
- The Metaverse Is At Least A Decade Away